Page 94 - Azerbaijan State University of Economics

B.N.Babayev: The rise of new institutional economics and assessment its contributions to the
post Washington consensus

institution of capitalism‟” (2006: 18). The statement of the Ankarloo concludes that
the contributions of the NIE to the PWC are not the solutions, but new theoretical
views within the PWC that are still seeking solutions for gaps of the Washington
Consensus.
On the other hand, Carroll (2005: 3) shows the PWC and its “socio-
institutional liberalism” derived from the principles of the NIE that seek to promote
good governance, social capital, transparent state and accountability have political
nature rather than economic goals.
I will review some cases from various countries and sectors how formal
institutions played an important role in the development processes which is major
contribution of the NIE to the PWC.
Brett argues (1995: 213) that institutional changes, open and democratic
institutions have created instability and autocracy in Africa in 1986. According to
his analysis, the theories that focus on the institutional reform are effective theories,
but they work in the western countries, but not in Africa, because western countries
only need to maintain them, and institutions have historical and cultural linkages in
the western societies. Imposition of institutional changes on traditional countries and
cultures may be demonstrated with conflicts as Brett argues (1999: 213).
On the other hand, the contribution of the NIE to the PWC which is
institutions (property rights, rule of law) is effective. However, markets and the
institutions will empower some groups and exclude the others (Carroll, 2005:26).
The case in Uganda in 1986 is a good example to support the arguments of Carroll.
Institutional changes in Uganda after 1986 have enabled the state to support certain
groups relative to others which had resulted in a failure (Brett, 1995:209-211).
Another example which assesses the contributions of the NIE to the PWC can
be seen from Indonesia. The KDP project of the World Bank started 1998 in Indonesia
aimed at poverty reduction by promoting the formal and informal institutions, good
governance and democracy had very limited work in poverty alleviation, while it
focused on democratic governance, NGOs, and institutional reforms (Edstrom, 2002:
2). This case shows that the contributions of the NIE within the PWC are in action.
However, the project had fewer consequences in terms of the poverty reduction, and
described as a political project by Carroll in his book (2005: 3).
In spite of fact that, the instruments of the NIE promoted within the PWC are
still discussed as solutions to fill the gaps of the Washington Consensus, and have
ineffective consequences in some cases, it is important to note that correct and

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